Private banks hit Syria

Forty years after nationalising the banking sector, the Syrian government has agreed to licence three private banks. Two banks from Lebanon and one from Jordan have received licences from the Finance and Credit Council, which was recently created to oversee monetary policy.

“The new banks will work alongside Syrian public banks within the framework and under the Syrian law,” said Ghassan Rifai, Syria’s Minister of Economy.

Until now, Syria’s banking sector comprised the Commercial Bank of Syria and five other banks, concentrating on industry, agriculture, housing, general business and savings.

Under Law 23 approved in December 2001, the banks must be 51% owned by Syrian nationals, while a minimum capital has been set up at £Syr1,500 (US $28.5 million).The banks will also need to begin operating within one year of the licensing, otherwise the licence will be cancelled.

The three banks will initially operate as commercial banks concentrating on financial trade and serving their clients locally.

Bank of Bahrain and Jordan’s Arab Bank were also selected for licences, but according to Rifai had, as of yet not fulfilled the necessary criteria. Of all the banks in the Middle east, the Arab bank has the largest network globally.

“Syrians have been banking in Lebanon, Cyprus and France for the last 40 years. The significance of Syrian banks in Syria is that the banks will be able to take local currency deposits and lend in Syrian pounds,” says a senior Syrian banker in the Gulf.

The Finance and Credit Council also aims to introduce a floating exchange rate system similar to the one recently established in Egypt.